Will GST change how VAT structure works?


Will GST change how VAT structure works?


All remains to be seen what exactly the GST bill comes with. As of now the bill is yet to be tabled in parliament. GST will replace all direct and indirect taxes and replace VAT, sales tax, entry tax, octroi tax etc in the long run when it gets implemented. India is likely to have dual GST
where you pay tax to center and state government both.


Hi Meera,

The Goods and Services Tax (GST) is a tax levied on the manufacture and sale of goods and services. It is an inclusive tax and will replace a number of other indirect taxes currently applicable in India.

The GST will include two components:

Central GST which will be levied by the Centre.
State GST which will be levied by the State.

The GST seeks to create a unified taxation system to include all indirect taxes under one tax. The GST will reduce the differences that arise because of inter-state variations in taxes.

Which are the taxes that GST will replace?

All taxes including the Central Excise Duty, Service Tax, Special Additional Duty of Customs (SAD) and cesses & surcharges for supply of goods and services, will be replaced by GST. The GST will also absorb other taxes like Value Added Tax (VAT), Central Sales Tax (CST), Purchase Tax, Luxury Tax and Entertainment Tax, among others.

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